Tema Tire Services (TTS) decided to hire a new mechanic to handle all tire changes for customers ordering a new set of tires. Two mechanics have been shortlisted for the job. One mechanic has limited experience, can be hired for GH¢14 per hour, and can service an average of three customers per hour. The other mechanic has several years of experience, can service an average of four customers per hour, but must be paid GH¢20 per hour. Historical data shows that customers arrive at the TTS garage at the rate of two customers per hour. b) If the company assigns a customer waiting cost of GH¢30 per hour, which mechanic provides the lower operating total cost (TC)
Tema Tire Services (TTS) decided to hire a new mechanic to handle all tire changes for customers ordering a new set of tires. Two mechanics have been shortlisted for the job. One mechanic has limited experience, can be hired for GH¢14 per hour, and can service an average of three customers per hour. The other mechanic has several years of experience, can service an average of four customers per hour, but must be paid GH¢20 per hour. Historical data shows that customers arrive at the TTS garage at the rate of two customers per hour. b) If the company assigns a customer waiting cost of GH¢30 per hour, which mechanic provides the lower operating total cost (TC)
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Tema Tire Services (TTS) decided to hire a new mechanic to handle all tire changes for customers ordering a new set of tires. Two mechanics have been shortlisted for the job. One mechanic has limited experience, can be hired for GH¢14 per hour, and can service an average of three customers per hour. The other mechanic has several years of experience, can service an average of four customers per hour, but must be paid GH¢20 per hour. Historical data shows that customers arrive at the TTS garage at the rate of two customers per hour.
- b) If the company assigns a customer waiting cost of GH¢30 per hour, which mechanic provides the lower operating total cost (TC)?
- c) With the aid of a sketch, show the economic relationship between service cost and waiting costs, and justify whether or not it is necessary for TTS to keep investing in better and/or additional mechanics until waiting time reduces to ze
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